Airbnb has most ‘geographically diverse inventory’ in vacation rental market: Analyst

DA Davidson Senior Research Analyst Tom White previews Airbnb earnings on Yahoo Finance Live.

Video transcript

SEANA SMITH: Tom, it's great to see you here. So first, just your reaction to the numbers that we're getting from Airbnb.

TOM WHITE: Yeah, look, they look pretty solid. It looks like a pretty clean quarter, as you remarked. A little bit of upside on revenue and EBITDA in the fourth quarter. And the revenue guidance for the first quarter is particularly strong. The low end of the range that they're guiding to is actually above where the Street is. So it sounds like some of the commentary we heard from Expedia around a really nice kind of snapback in travel in January is kind of extending here to Airbnb. And also, the guidance on EBITDA for the quarter was above the Street, too.

And I think the other main takeaway, too, is, they made some comments in the letter about margins for calendar 2023 basically being in line with 2022 levels. I think some investors worry that as kind of the economy reopens, people start going back into physical offices and doing corporate travel, that expenses, operating expenses, might tick up for some of these companies, but it sounds like Airbnb is going to be able to hold margins steady.

DAVE BRIGGS: Just an insatiable appetite to travel, Tom. Is there any concern-- and let's stay with Airbnb before we move over to trip-- 88.2 million nights. The estimate was for 90 million. And the other one that jumps out-- and maybe it's just me-- 900,000 more listings on Airbnb at the end of '22 than they had at the beginning. At some point, is there just oversaturation?

TOM WHITE: Yeah, look, so on room nights, maybe a little bit light versus consensus, but still growing room nights significantly at a faster clip than some of the big, other kind of more traditional online travel brands. We think that just reflects the fact that Airbnb was able to use the pandemic as just this great opportunity to acquire a whole new cohort of customers that had never used the platform before. Those people, we think, will be sticky customers over the long-term.

And then, secondarily, just vacation rentals in general continues to be the best performing kind of pocket of the market. Airbnb has got the most geographically diverse inventory hits. All of the use cases, including some new ones that some of the other traditional OTAs maybe struggle to participate in, like work from anywhere or these long-term stays, right? 20% of Airbnb's room nights are for something like 28 days or more. So, still very strong growth, even if it fell maybe a smidge short of consensus.

On hosts, you know, I think there's a tailwind here from kind of what's happening in the broader macro, right? You've got mounting kind of inflationary pressure, and then some macro pressures. We think that's going to be a tailwind for supply. It'll be interesting to see how Airbnb balances that big spike in supply and make sure that there's enough demand to satisfy all of those new hosts. But that's something that we'll have to keep an eye on for this year.

SEANA SMITH: Tom, lots of talk just about the economic conditions, the risk that that might bring here for Airbnb. Any indication-- and it doesn't look like from these numbers, just at first glance, that consumers are trading down, that they're opting for some of those cheaper options, given the current economic climate.

TOM WHITE: Yeah, so far, so good. If inflation kind of remains persistently high, you know, that won't last forever. But at least so far, it doesn't seem to be eating into the underlying desire for folks to travel. We've seen a lot of the data out there around services related spending by consumers being a lot stronger than spending on goods. We think that bodes well for all of these travel guys.

I'd also keep in mind, too, that the vacation rental space, generally speaking, even though rates and ADRs have kind of gone up in this category like traditional hotels, we still think this is a significantly cheaper option when compared to kind of a comparable kind of traditional hotel stay. So it's not exactly value, given the fact that ADRs have kind of gone up so much over the last couple of years, but still represents, I think, a really strong value when people are evaluating travel.

DAVE BRIGGS: OK, quickly, I want to get your take on Trip. The numbers there reporting, their stock also popping as well. Investors like what they see. How much is Viator, which has really been leading the way for them? And what did you see here that stood out?

TOM WHITE: Yeah, so still kind of going through the press release there, but yeah, obviously, the headline kind of revenue beat was solid, and same on the bottom line. You know, that sort of changes a little bit of the MO for these guys over the last few quarters. Last few quarters, Tripadvisor has been outperforming on EBITDA and doing really well at cutting costs and staying disciplined, but the revenues have kind of underwhelmed a little bit. Nice to see them beat on-- beat expectations on revenue.

We think Viator continues to be a really strong contributor. We also just think that kind of nice, robust recovery in travel is just kind of a rising tide that's lifting a lot of boats here. And with Tripadvisor, they also guided to basically flat kind of margins year over year in calendar '23. I think the institutional investor community is responding positively to that.

DAVE BRIGGS: All right, Tom White, DA Davidson, good stuff. Thank you, sir.

TOM WHITE: Thank you.

DAVE BRIGGS: Be sure to stick around tonight around 5:30 Eastern time as Brian Sozzi and Brad Smith will recap Airbnb's earnings call and breaking out everything you need to know and what they hear from CEO Brian Chesky. Always an interesting, compelling speak--